This is the credibility trap.
Some of it is professional not-initiated-hereism, but quite a bit more is a culture of privilege and practical exemptions for the few who run the system. And professional courtesy with London for both our banks and theirs.
Cronyism and complicity, active or passive, take your pick.
"If you want to understand exactly what's going on here, reread the four or five pages in chapter 1 of my book about my battles with Washington over the FARC case. Exactly the same thing happening here.
They'd rather trash a potentially legitimate case than admit that they were asleep at the switch, especially now after the recent revelations about their failures with LIBOR and HSBC."
Neil Barofsky, speaking about the Standard Chartered affair.
Read the entire story at Business Insider here.
They didn't "fail" to regulate LIBOR. They did not even bother, for whatever motives that you care to impute or infer. They knew what was going on and turned a blind eye to it, just as they are doing with the rigging of the commodity and equity markets.
The incompetence and non-involvement defense is getting a little worn out in this financial scandal.
Casual corruption of the markets is now being accepted as a necessary system overhead, as a tax on the public to support the failed financial system, which is being kept alive to support a kleptocracy of politicians and the monied interests. It is sustained through fraud and force, but has little to do with the real economy anymore.
It is important to get this to understand what is going on.
As Glenn Greenwald describes it so well, the kleptocracy based on class position has become fully rationalized and institutionalized.
"What is radically different about today is not that the rule of law suddenly is not always being applied faithfully, because that has always been true. What is different about today, radically, is that we no longer bother to affirm that principle...
You can often, and I would say more often than not, in leading opinion-making elite circles, find an expressed renouncement or repudiation of that principle...All of these acts entail very aggressive and explicit arguments that the most powerful political and financial elites in our society should not be, and are not, subject to the rule of law because it is too disruptive, it is too divisive, it is more important that we should look forward, that we find ways to avoid repeating the problem...the rule of law is not that important of a value any longer...
The law is no respecter of persons, but the law is also a respecter of reality, meaning if it is too disruptive or divisive that it is actually in our common good, not the elite criminals, but in our common good, to exempt the most powerful from the consequences of their criminal acts, and that has become the template used in each of these instances."